1. Field of the Invention
The invention relates to supply chain management. More specifically, the invention relates to selection of efficient quantities for distribution in a supply network.
2. Background
A typical supply network may include multiple levels. For example, there may be a plant at the top of the network with a plurality of distribution centers at a second level followed by a number of end use locations, such as, retail establishments at a third level down. It should be understood that supply networks may have more or fewer levels than three. It should also be understood that where a location falls in the supply chain will vary depending on the product at issue. For example, the plant may be the “end use” target location for parts it assembles into other products. Other supply chains model only a portion with total supply chain. For example, some supply chains may only model distribution centers without modeling the end use client.
The supply chain management process includes several discrete operations. At a first stage, the demand at each target location in the network is forecast. In a second stage, inventory planning is undertaken to calculate, for example, economic order quantities and safety stock required at the various locations. Distribution resource planning (DRP) then uses the forecast, inventory planning and any special requirements of the various target locations to calculate the net demands. Deployment is typically performed on a level by level basis. A source makes the deployment decision for each of its target locations based on the net demands calculated by DRP. Thus, the supply chain network described above, the plant would make deployment decisions to each of its distribution centers, and the distribution center would each make deployment decisions to their respective associated target locations. Deployment has typically been carried out by selecting the net demand calculated in the DRP process and shipping the nearest whole unit to the requesting target location. This can result in shipment of many individual pieces or smaller size lots which carry higher per unit transportation costs.